Despite receiving increased allocations from the federal government, 10 Nigerian states have plunged deeper into debt, borrowing a staggering N417 billion in a bid to stay afloat.
Investigations by The PUNCH reveal a disturbing trend: seven states—Bayelsa, Adamawa, Benue, Niger, Kogi, Taraba, and Bauchi—spent on average 190% of their Internally Generated Revenue (IGR) on debt servicing during the first quarter of 2025. In some cases, debt repayments exceeded the states’ total IGR by over 300%, leaving their finances on shaky ground.
Data from the Q1 2025 Budget Implementation Reports paints a grim picture. Combined, the seven states spent N98.71 billion servicing debt, marking a 51% increase from the N65.24 billion recorded in Q4 2024. This alarming spike highlights the growing fiscal pressures facing subnational governments, many of which are now borrowing just to meet basic financial obligations.
Economic analyst and Director at Proshare Nigeria, Teslim Shitta-Bey, warned that this pattern could trigger a deeper fiscal crisis in the near future.
> “The challenge here is that most of the governments, including the Federal Government, are unable to manage their balance sheets properly. Borrowing may seem like a quick fix, but it’s a dangerous path,” Shitta-Bey told Frontline Reporters
He emphasized that borrowing should be strategic, not habitual. Instead of relying on short-term loans, he urged states to explore long-term debt instruments or structures akin to equity, which could offer more sustainable financial relief.
Shitta-Bey also highlighted the need for a comprehensive national asset register, pointing to neglected public assets like the National Stadium, which could be revitalized to generate capital. Additionally, he criticized the underutilization of state revenue bonds, originally designed to raise capital for infrastructure and development.
> “States need to shift focus from general obligation bonds to revenue-generating bonds. That’s how you build financial resilience,” he added.
With rising debt costs outpacing income, experts say urgent fiscal reforms are needed. Without action, the financial survival of several states may soon hang in the balance.
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